Strategy 106 of 107 · new for the five-year plan
Lease or sell mineral rights you own
What it is
If you own mineral rights, an operator may pay a signing bonus and royalties on a lease, or buy the rights.
Steps
- If you own mineral rights, an operator may pay a signing bonus and royalties on a lease, or buy the rights.
- Have an oil and gas attorney review terms.
- Send the bonus, royalties or sale proceeds to principal.
Repeat: Bonus once; royalties monthly.
Measure: Bonus and royalties after tax.
Try it in the calculator Enter its amount in "One-time amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- Drilling may never happen.
- Selling ends future royalties.
- Surface damage terms matter.
Who it fits
Grandmas and grandpas (62 and over), Married couples, Higher net worth, with assets, Average household
Needs
Owns mineral rights
How predictable
Depends on markets or variable rates
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: if you own mineral rights, an operator may pay a signing bonus and royalties on a lease, or buy the rights.
Suppose it brings a one-time $100,000 on principal. The loan would be paid off in 13 years 1 month instead of 30 years, saving about $285,309 in interest. To finish in five years, they would still need about $2,017 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Five-year sprint: landowner: Land can pay three ways: a lease each year, a one-time bonus or easement payment, and the sale of a lot you do not need.
Sources and more information
Where to get help
Related strategies
- 87. Negotiate fair pay when a pipeline or power line crosses your land
- 84. Claim refunds and settlements you are owed
- 83. Find lost pensions and old retirement accounts
- 82. Use an annuity's yearly free-withdrawal amount
- 81. 73 and over: send required distributions you don't need to principal
- 80. A parent's or grandparent's large gift, using their lifetime exemption